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Monday, 8 August 2016

Net foreign reserves fall USD 2 bn to USD 15.5 bn

Net foreign reserves fell USD 2 bn to USD 15.5 bn in July, down from USD 17.6 the month before, according to a statement (pdf) from the Central Bank of Egypt on Sunday evening. As expected, drop came as Egypt repaid foreign debt and other obligations including USD 1 bn to Qatar and USD 720 mn to the Paris Club. The central bank also returned USD 250 mn to Libya, paid off USD 207 mn in arrears owed by the state oil regulator EGPC, and satisfied USD 55 mn in unspecified “short term obligations.”

The news came as the central bank continued its crackdown on exchange bureaux it says are guilty of “repeated violations,” shutting another office down yesterday, Al Masry Al Youm said. The bureau, Brent Exchange, had its licence revoked, bringing up the total number of shuttered FX offices to 24. The CBE also suspended four bureaux for a year and another two for six months. Yesterday, we noted that the Federation of Egyptian Chambers of Commerce representing FX bureaux is considering a motion to shut down exchanges for a three-month period to demonstrate that they do not hold complete control of the parallel market. Or to hold a gun to everyone’s head. Your call how you see their move.

The EGP weakened slightly to EGP 12.55 to the greenback on Sunday. Traders told Al Mal that the drop was largely attributed to rising demand following the recent crackdown on FX bureaux. Transactions are being made “very carefully,” with traders often only selling to “trusted” clients.

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